Advice wanted... '96 vs. '05?

[AstroWyo]

I'm looking for good advice but will hear out bad advice.

My '96 Astro has been parked for a coupla years with a bad intake gasket- bad enough that it left a coolant residue on the back windows. I parked it to minimize the damage.

Been considering my options forever.

Went to do taxes today for my 7 month old LLC. It'll be a while before I recover.

My accountant said it wouldn't hurt to depreciate a vehicle through the company. Now you might be saying "a ha!" Man's nature will find a way.

Then, I got to thinking: there's lots more depreciation in an '05 Astro. So I perused lightly.

My choices are thus: register the '96, fix it for $400-$5000, depending on damage. Then, the lift kit.

OR, buy the '05 for about $9k if it's good, depreciate more, then, the lift kit.

As I understand it, the difference between the two: dutch doors/barn doors- I don't care, 16" wheels, better brakes, suspension upgrades?, new trans case. Is the new one better? I've read some negative comments about it. What else is different? Better crash test rating, I know.

Is it worth it? Feel free to weigh in if you know something about taxes, too.

[1Gary]

I don't remember any tax questions related to these vans on the forum before.But with the 96 I do think you could use that as a tax benefit for a longer time period.Let's say you bought a crate Jasper engine and had it installed.I would think tops it wouldn't go beyond $4,000.And that is a high estimate.That is saying what you have isn't a repairable situation and it might be.

I would suggest you have a shop you trust look at your 96 and then go on from there.

[Kabey's Van]

A tax question....and he isn't even a Canadian.
What to hells go'in down there.

Peter

[chevymaher]

Im not sure how much brakes you need.Mine older than dirt.My mom ask me once why the rear wheels were squeeling when she stopped.Followed her one day.She was standing on the brakes so hard the rear tires were coming up and quit spinning.When she let off the brakes a little they barked coming down.So they all seem to have good brakes.

[blacknome]

I know when I started my company back in '05 I wanted to buy an older van but the accountant leaned me towards the van I have now ( it was only 3 years old at the time ).
His advice was that
A: the payments, fuel, and insurance would be paid for by the company. Being that the van was a GMAC financed the payments were easier to track and prove if audited versus getting an older van and fixing it up.
B: It also shows as a higher valued asset/collateral "on the books" when you need to take out a loan or get financing

There will be obvious differences between Can and US but it made sense to me. I made good sense when I had to open up a line of credit for the Company. Because the company was so new and I was the sole employee I had to list every asset I had ( van, car, racking, desks, chairs, computers everything ). Now 5 years later the van is long since paid off so I can write of maintenence, fuel, ins, ect.

Now you have me confused by the depreciation value of the vehicle. I know when I do my taxes it is calulated as part of the mileage ( because the van is used 100% for company use right :P ), or are you looking at financing the cost of the rebuild on your 96 and see if the tax man will let you write it off ??

[AstroWyo]

Thanks.

I probably have one of the dumbest looks on any taxpayer's face when at the accountant. As I understand it, I can write off repairs, registration, taxes, insurance. I've left the concept of depreciation out of my brain to allow for more valuable brain functions like remembering music trivia. I think it means that the more I pay for a vehicle (as long as it's fair market value) the more I can use as a deduction. So, spend the money so I don't have to pay taxes on it. Is that right?

I'm having a hard time with spending a ton of money on a newer van but could see how it might be important for my work van to have a lift kit and deduct that cost and the cost of any surprise repairs that come up after the company purchases my van. I don't buy expensive vehicles so it's hard for me to think of doing that.

The '05 is still an unknown to me. I don't know what makes it better, really. Doesn't seem like there's much more than the thought of having something newer.

[Meterpig]

Here you go.

You don't see a sweet 05 like this come along too often .

http://cgi.ebay.com/ebaymotors/ws/eBayI ... 144wt_1162

[mdmead]

Here you go.

You don't see a sweet 05 like this come along too often .

http://cgi.ebay.com/ebaymotors/ws/eBayI ... 144wt_1162

Sweet!

I almost bid on it.

[blacknome]

I think it means that the more I pay for a vehicle (as long as it's fair market value) the more I can use as a deduction. So, spend the money so I don't have to pay taxes on it. Is that right?

.

Correct !! Think of it this way, if you had to pay $100 for a part from you pocket the company has to pay you $120 gross so that you net $100 after taxes to pay for that part. Or the company can pay the $100 and show it as a "cost of business".
The flipside is that your company has to pay taxes on the profit that it generates, so the more writeoffs that a company has ( car leases, building leases, ect ) then there is less revenue left to pay taxes on and you as the employer reap the benefits of driving a newer vehicle while the company picks up the tab.

If you can justify the repairs to the old truck then you can write them off. For example my freind runs a sign compnay and beats thru a truck every 5 years or so. Each replacement truck he gets he has to put on a lift kit, a winch, and big tires because he puts up signs in the middle of muddy fields under developement and its a legitimate writeoff. My company being transportation based couldn't write that off because I would have no use for something like that.

[AstroWyo]

I saw that '05 on e bay, too. Very nice. Kinda far from Wyoming, though, for something I can't even look over. I think it's in Ypsilanti, Michigan. Anybody from Detroit area want to look at it?

Thanks for taking me to the next level in understanding vehicle write-offs. I doubt that I could justify the lift kit but that's okay.

[peter]

I think it means that the more I pay for a vehicle (as long as it's fair market value) the more I can use as a deduction. So, spend the money so I don't have to pay taxes on it. Is that right?

.

Correct !! Think of it this way, if you had to pay $100 for a part from you pocket the company has to pay you $120 gross so that you net $100 after taxes to pay for that part. Or the company can pay the $100 and show it as a "cost of business".
The flipside is that your company has to pay taxes on the profit that it generates, so the more writeoffs that a company has ( car leases, building leases, ect ) then there is less revenue left to pay taxes on and you as the employer reap the benefits of driving a newer vehicle while the company picks up the tab.....

It never ceases to amaze me how most people seem to think that writing off expenses in the company is like a magic cookie jar with a bottomless pit

If you started your company in 05', chances are you needed to borrow some money to do so, right? Depending on how much, chances are you need to submit year-end reports (if you're lucky, un-audited which costs much less). So essentially, you need to put on a dog'n pony show for your bank manager every year 'till the loan gets payed off.

Yes, it's great to write stuff off in the company's name. And very true, the less profit you show, the less Mr Tax-man gets (not sure,but I believe that corporate taxes run around 20-25% in my case). But if you owe even just $50k and you show your bank manager a loss every year (which is great for tax purposes, it gets carried over the following year), you think he's gonna be a happy camper? I say "Nay nay"!

Now if you borrowed nothing and don't have to impress anyone, great. You're lucky. Remember though, if you ever do need to borrow for another vehicle, tools etc, or need a line-of-credit, your past financial statements may kick you in the gonads.

[Kabey's Van]

Welcome back Peter. I hope all is well.

Peter

[crash]

i know nothing about biz taxes/write offs

Here you go.

You don't see a sweet 05 like this come along too often .

http://cgi.ebay.com/ebaymotors/ws/eBayI ... 144wt_1162

wow, an as/fari with no cracks in the driver side arm rest AND still has the rubber cup holder inserts that in itself has got to be worth $5000
very clean too, very rarely see black ones up here

[blacknome]

I think it means that the more I pay for a vehicle (as long as it's fair market value) the more I can use as a deduction. So, spend the money so I don't have to pay taxes on it. Is that right?

.

Correct !! Think of it this way, if you had to pay $100 for a part from you pocket the company has to pay you $120 gross so that you net $100 after taxes to pay for that part. Or the company can pay the $100 and show it as a "cost of business".
The flipside is that your company has to pay taxes on the profit that it generates, so the more writeoffs that a company has ( car leases, building leases, ect ) then there is less revenue left to pay taxes on and you as the employer reap the benefits of driving a newer vehicle while the company picks up the tab.....

It never ceases to amaze me how most people seem to think that writing off expenses in the company is like a magic cookie jar with a bottomless pit

If you started your company in 05', chances are you needed to borrow some money to do so, right? Depending on how much, chances are you need to submit year-end reports (if you're lucky, un-audited which costs much less). So essentially, you need to put on a dog'n pony show for your bank manager every year 'till the loan gets payed off.

Yes, it's great to write stuff off in the company's name. And very true, the less profit you show, the less Mr Tax-man gets (not sure,but I believe that corporate taxes run around 20-25% in my case). But if you owe even just $50k and you show your bank manager a loss every year (which is great for tax purposes, it gets carried over the following year), you think he's gonna be a happy camper? I say "Nay nay"!

Now if you borrowed nothing and don't have to impress anyone, great. You're lucky. Remember though, if you ever do need to borrow for another vehicle, tools etc, or need a line-of-credit, your past financial statements may kick you in the gonads.

Very true, and it can be easy to get carried away with spending if you are not accustomed to managing money. With that in mind I would like to add that running your own business can be very high stress and has no safety net. The beating I took over the last 2 years sucked up the previous 2 years of profits. This makes me long for the days of 9-5, payiing your taxes on-time, a steady paycheque, help with labour, and vacation time. Like Peter stated it's not all a cookie jar full O cash.

But if you are in it, and are risking your credit to do so, write off what you can.